A teaser rate is a low, adjustable introductory rate advertised for a loan or credit card in order to attract potential customers to obtain the service[1]. The teaser rates are normally too good to be true for the long term, and are far below the common realistic rate for the service. In a competitive market, many companies will compete with each other for the lower teaser rate[2]. Typically, the teaser rate is 0%.
The teaser rate is only temporary. After its expiration, the rate increases to a normal or much higher than normal rate[3], and in some cases, the borrower cannot keep up with making payments.
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